Quote Originally Posted by Ramil View Post
That's your idea of short?
It's really short considering the length of the entire story,

Quote Originally Posted by Ramil View Post
Croc, I would hate to disappoint you, but that really was a rhetorical question. (trollface).
Yes, I got that. I'm only saying the system we see today has evolved historically. It's not like someone evil had something really bad for breakfast, felt sick and started to cut the paper into pieces, write some arbitrary numbers on them and sign them by "666".

Quote Originally Posted by Ramil View Post
Thanks for the story anyway, thought it's a bit naive and incorrect, but it describes the main things pretty well.
Мысль изречённая - есть ложь. А мысль изречённая, сильно укороченная и с вырезанным контекстом - есть короткий рассказ.

Quote Originally Posted by Ramil View Post
Before the middle of XX century, the powers used paper money simply because they were more convenient than carrying a heavy bag of gold with you, BUT if you really needed, you could ALWAYS exchange your paper money for a FIXED amount of gold (or any other value which was used to secure the paper). This was stamped on any banknote of every state. That stood for reason and helped to avoid the inflation. Even in your story, every paper (or legal obligation) used for a payment was backed up with something. Something fixed.
Aha! Got you! The golden equivalent was already inflation prone. What you're saying helped to avoid a CATASTROPHIC inflation to a certain extent, but nothing more than that. It's true the gold stood behind the paper, but what stood behind the gold? In my example that was the CROP! That was the ultimate value which stood behind the golden bars. Or the villages as the direct means to produce the crop. For example, I personally do not like to wear gold, so the gold by itself worth nothing to me. However, if I can exchange the otherwise useless gold for food (as promised by the government) then I would agree to do some work for you in exchange for gold as I know that is just a temporary measure. And when the food is scarce, it would worth 10 golden bars and not 1 golden bar (=>inflation!) as those who have the food would prefer to eat it rather than share it with me. However, if I'm optimistic and I believe that the scarcity of food would be over then in the meantime I could eat the bark off the trees as well as the unlucky snails and snakes and do not exchange my 10 golden bars for food. And if that happens and the food scarcity is over, the food would cost 1 golden bar again. And I would be able to exchange them for 10 times more food that when the food was scarce. Yay! That is the only fundamental difference between the golden currency and the paper currency. In theory. But in practice, people are not ready to eat the bark and they prefer to stop spending and start collecting the golden bars because maybe the food scarcity would become worse and they would need more golden bars to pay for it in the near future thus effectively removing the golden bars from the circulation. So if you're the government what would you do? You have no golden bars to pay those in your service, and you have no golden bars to exchange for food and feed them directly. What are you going to do? You can either start promising them everything will be ok (=start issuing "promissory notes" = paper money) or stop paying. The later option was exactly the situation in the Middle Ages. They could afford themselves to call the usury the sin, because they got the service done for them FOR FREE!! Most of their servants (the ordinary people) were obliged to do free work for their masters or be imprisoned (=made to work for free anyways) or being killed. As soon as the serfdom was left behind (due to some other reasons) the governments were left without that cool choice, so they had to start issuing promises (=the paper). It had just happened historically that way. Whatever is the most practical survives in the long term.